review_2009_2010_august_belmont_1

‘A mystery to the future historian…’?
August Belmont and the Atlantic Trade
in Cotton 1837‒1865
Kathryn Boodry explores how the House of Rothschild and the financier
August Belmont spearheaded a new phase of enterprise in America.

In a letter to the London house in 1863 August Belmont commented acerbically: ‘It will always
remain a mystery to the future historian to explain the sympathy which a large portion of
civilized Europe gave in the nineteenth century to a rebellion the principal aspect of which was
the extension & perpetuation of the odious system of slavery.’¹ Belmont’s disingenuous claim
belies the fact that he, like most agents of Anglo-American financial houses, was well aware that
the American Civil War, at least in part, was about the revenue generated from agricultural
goods produced in the south. Tobacco, sugar, cotton and rice, all commodities produced in the
southern United States with slave labour, were vital exports for the emergent nation. After 1815,
the United States was the largest producer, and Great Britain the largest consumer of American
cotton.² The economic undercurrents that influenced political allegiances during the Civil War
were well understood in the nineteenth century, particularly by merchants and bankers, as was
noted in Punch:
Tho’ with the North we sympathize,
It must not be forgotten
That with the South we’ve stronger ties
Which are composed of Cotton.³

Above
August Belmont.
www.picturehistory.com

In the nineteenth century cotton literally wove together an Atlantic world of factors, agents,
merchants, financiers, slaves, stevedores and spinners. It was a vital source of revenue for
northern coffers and no doubt coloured perceptions of the need to ‘preserve the union.’ Trade
in cotton also fostered the development of sophisticated financial relationships between the

southern United States, New York and London. After a brief summary of August Belmont’s
history with the congeries of Rothschild houses, this article will consider his operations in
cotton on behalf of the Rothschilds in the context of the Anglo-American trade in American
cotton in the antebellum period, as well as the approach of the Paris and London houses to
business in the United States.
Belmont’s association with the Rothschild firm began humbly with his apprenticeship to the
Frankfurt house at fourteen, his primary responsibilities being sweeping floors and polishing
the furniture in the office. He moved up the ranks quickly, becoming a private clerk and,
eventually, secretary.⁴ In 1837 Amschel von Rothschild sent Belmont to Cuba to investigate the
repercussions of the first Carlist War for Rothschild interests in the region. Arriving in New
York in May en route to Havana, Belmont found himself in the midst of a financial panic of
global proportions that some writers have attributed in part to over-speculation in southern
cotton.⁵ He was instructed by the London house to remain in New York ‘for the present
time…’ since he would ‘have more opportunity for protecting our interests in New York in
receiving our property from Mssrs Josephs & sons’, ‘who had suspended payments two months
previously’.⁶ Belmont instead decided to settle in the city and establish his own agency, much to
the chagrin of both the London and Paris houses. Baron James de Rothschild concluded that
13


‘he is a stupid young man…. Such an ass needs to be kept on a short leash.’⁷ This assessment
served to colour the firm’s relations with Belmont for the duration of his tenure. Nevertheless,
Belmont became the American agent representing the London and Paris houses and August
Belmont & Co. continued in the role in the United States until 1922.⁸
Feckless and irresponsible as Belmont’s behaviour might have appeared, he was wise beyond
his years at twenty-three. He understood that remaining in the United States was a unique
chance to better his position in the world, and was savvy enough to comprehend how the
various markets functioned.⁹ Within three years of his arrival, he was reputed to be one of the
wealthiest men in New York, as well as one of the most important bankers in the country,
known as ‘the king of the money changers’ because of his mastery of arbitrage trading.¹⁰

Belmont went on to serve as the Austrian Consul from 1844‒1850 and the Ambassador to The
Hague in 1853. Additionally, he held various offices in the Democratic National party.
Initially the Rothschilds’ involvement in American markets had revolved around the
transport and sale of quicksilver, as well as investment in state and municipal bonds. Soon after
Belmont’s arrival he became intrigued by seemingly more profitable financial ventures with
which to entice his employers, including speculation in commodities produced with slave
labour, like sugar, tobacco and cotton. Given the recent financial panic, and shortage of money,
there was plenty of room to do business if one had cash to hand, as Belmont noted early on: ‘I
think that the coming season will give opportunity to a safe and lucrative business… perhaps
more as than [sic] in any previous one… the prices of cotton will average low and comparatively
few houses will probably be able to accept large consignments…’.¹¹ Belmont had enough
confidence to believe he could eliminate, or minimise, the inevitable risk involved in these
speculative ventures, and a more enthusiastic estimation of potential profits than was likely
shared by his employers.
It was no secret that cotton was an increasingly lucrative commodity and that the triangular
trade between southern ports, New York and Liverpool could be fantastically profitable. The
difficulty was that the trade was also incredibly volatile, involving not only speculation in the
commodity but often in bill discounting, arbitrage trading and the advance of credit against
future crops that was part and parcel of the business.¹² The erratic nature of commercial
operations was exacerbated by the fact that entry into the world of cotton speculation was
relatively simple. This made it very difficult for anyone to control or dominate trade in the
article, and no firm ever managed to control much more than 15% of the market in the
antebellum period.¹³ More people speculating in the commodity increased volatility, so timing
was often crucial. It was most advantageous to enter the market after panics, when money was
scarce, prices were low and competition was minimal, as Belmont pointed out to his employers
in both Paris and London on numerous occasions, often playing one against the other.
The Paris house has some idea of accepting consignments of cotton during the next
season. I think that no more precipitous time could be selected. The low prices of cotton
and the want of competition will allow those who come early in the market to make their
own conditions…¹⁴

Unfortunately, Belmont was apparently ignorant of the almost daily communications between
the London and Paris houses and this weakened the persuasiveness of some of his appeals
considerably.
The Rothschilds had other views on cotton, their thoughts coloured by different assessments of risk. Baron James de Rothschild advised his nephews in London around this time, ‘all
the people are speculating on cotton which will now be sold at any price and we will have to
consider very carefully whether we do in fact want to get so deeply involved in the American
business.’¹⁵ James was well aware of the volatility in the market and his assessment of it was
quite prescient. It has been suggested by some historians that the Rothschilds failed to take
14

Opposite
Detail from a bill of
exchange. The bill forms
part of the collection of
documents relating
to the period when
N M Rothschild was
Banker to the US
Government in Europe.
ral ii/46/0a
Opposite, below
Final page of a letter from
J Hanau, New Orleans,
12 February 1844, to James
de Rothschild Paris. Hanau,
the agent of the Rothschild
businesses, discusses the
market in cotton and other
commodities. He concludes
the letter, ‘I wanted to send

some lead to Antwerp but
the Captain will only take
it if I give him 50 or 100
bales of cotton but as I do
nothing without any orders
I send neither one nor the
other.’
The Rothschild archives,
Roubaix, aq132 60p


advantage of opportunities in America. However a more considered view of their involvement
in financial ventures in the nineteenth-century United States reveals a thoughtful and cautious
approach that, although it did not yield extravagant profit, also avoided catastrophic losses,
which fits very well with an end goal of wealth preservation.¹⁶ Part of their hesitation around
investments in American ventures can undoubtedly be attributed to their frequently acrimonious relationship with Belmont, but much of it was probably a matter of simple prudence, or
avoidance of what they perceived to be an unacceptable level of risk. The inherent instability
of operations in cotton was well understood by all the major Anglo-American houses. After the
panic of 1837 some of them, most notably Alexander Brown and Sons, the firm most active in
the consignment and sale of cotton, resolved to reduce their involvement in the commodity and
focus on specie-based transactions and discounting bills, effectively transforming themselves
from merchants to bankers.¹⁷ In light of the precarious nature of the trade and the financial
position of the respective houses it is reasonable to assume that Nathan’s sons in particular
abided by his dictum that ‘it requires a great deal of boldness, and a great deal of caution, to
make a great fortune; and when you have got it, it requires ten times as much wit to keep it.’¹⁸
Speculation in cotton was simply not as enticing when the preservation of wealth was given
precedence over the potential of high returns.
In retrospect, it is clear that the advice Belmont proffered on cotton investments was often,
but not always, sound. His letters display a thorough consideration of the complex influences
at play in determining supply, demand and pricing and an astute grasp of the play of larger

regional and geographic interests. Belmont often considered commodity sales, the abundance
or scarcity of money, and political events when determining what investments were most likely
to yield ‘handsome profits’ and was quick to scold when his advice was not followed and profit
forfeited as a result. He also anticipated the effects that sales, or lack thereof, would have in
other markets. ‘The effect of the heavy transactions in cotton at the southern markets is beginning to be felt upon exchanges & I think that henceforth the export of specie to Europe will
be on a small scale until next spring.’¹⁹ He goes on to note that exchange has already dropped
in New Orleans and that, in this instance, the London house lost out on a handsome profit by
not giving him permission to act. Even Betty de Rothschild begrudgingly acknowledged
Belmont’s detailed understanding of the American markets, stating that ‘he knows inside-out
all the country’s resources; he holds the key to all the wheeling and dealing in the commercial
world and he knows which sources to tap, which are the means of success, which are also the
pitfalls that must be avoided.’²⁰ Much of this knowledge was hard earned, the result of years of
hard work and time invested in the cultivation of business relationships in the North and South.


Belmont was also compelled to master quickly many of the difficulties attendant on trade in
cotton, and by extension, stocks, bonds and discount paper. Planters were often cash hungry
and capable of all types of crafty tricks in order to increase their profits, resulting in the need
to evaluate critically all reports from the South. Southern planters were often deeply in debt. In
part this was a result of the rhythms of the plantings and harvests, but it also had much to do
with the nature of plantation life. The planter would spend profits, potential profits and future
profits in the relentless quest for more slaves and land to grow more commodities.²¹ And with
good reason; this type of investment yielded greater production, prestige and political power.
‘To sell cotton in order to buy negros – to make more cotton to buy more negros ‘ad infinitum,’
is the aim and direct tendency of all the operations of the thorough going cotton planter; his
soul is wrapped up in the pursuit.’²² The wisest of agents and cotton merchants learned when
a healthy dose of scepticism was warranted, developing an intimate sense of weather, borrowing and sale patterns throughout the cotton belt. Additionally they cultivated information networks across the region, often receiving daily reports from correspondents. In years when there
was an expectation of a large crop, knowledge of which pushed prices downward, planters
would sometimes spread rumours of frost striking the plants, or hold back the cotton in hopes
of diminishing expectations of the yield and driving up the price. Invariably Belmont would

pass on the reports of these erratic and spontaneous outbreaks of frigid weather, noting when
he had ‘not much belief ’ in the veracity of the accounts.²³
A hearty measure of caution was called for in markets that were often ruled by manic
spending and irrational decisions. Default and suspension of payments were common. Planters
frequently leveraged themselves to the hilt, incurring debts of such magnitude that repayment
was simply impossible. Often these debts were securitised using real property, which in this time
and place meant both plantations and human chattel – slaves.²⁴ When planters were unable to
pay, the end result was a loss of slaves or the entire plantation for the planter and a highly
resented lock-up of funds for the imprudent creditor. In this way, many Anglo-American
houses, including the Browns, found themselves reluctant plantation owners. In the case of
Alexander Brown and Sons, they ended up in the unenviable position of running these
plantations for a period of years before they were able to sell them, eventually, for a profit.²⁵
The Paris house narrowly averted a similar fate in 1841 upon the death of John Forsyth, a
former United States senator and Secretary of State. Forsyth was also a planter, to whom the
Rothschilds had extended substantial credit. In settling his accounts his son found the estate
unable to offer immediate remuneration in cash and instead suggested the firm accept the
plantation and several slaves as payment at what was perceived to be a very favourable valuation
of the property. This was refused out of hand, the Paris house opting to wait until 1850 for the
payment of the debt in full.²⁶ Both houses assiduously avoided using slaves or plantations to
securitise debts, which reduced their vulnerability to the volatility in Southern credit markets.
On the one occasion when they might have ended up holding chattel property they opted to
wait patiently for payment, losing access to their capital for nine years, but keeping their hands
(relatively) clean.²⁷
Together, all of these factors resulted in a steep learning curve and suggest yet another reason the Rothschilds may have opted against the establishment of an American house, even
though it seemed, at various points, that they were poised to do so, particularly in 1849 with
Alphonse de Rothschild’s visits to New York and Louisiana. It is abundantly clear from Betty
de Rothschild’s letters to her son during his sojourn in America that this was a topic of discussion between Alphonse, his parents and the London house. She mentions various schemes,
claiming at one point, ‘I would not want to abandon the plan to see one of you established in
America for anything in the world, and deliver this great future from the stupidity and greed of
an agent.’²⁸ Betty proves herself particularly aware of Belmont’s status in American society

and his value to the firm, even though she views him as wily, irascible, and reaching beyond his
16

Extract from the New
Orleans Commercial Times
Prices Current – Annual
Statement for 1846 sent
back to London by the
Rothschilds’ New Orleans
agent A. Lanfear & Co.
ral xi/38/164



rightful social position. ‘B. has created for himself a strong and independent position,’ she
notes, discussing his skill in developing business relationships and his mastery of the myriad
and complex skills essential to operating in the Atlantic markets, concluding ‘all that makes him
an important man these days.’²⁹ She goes on to point out that upsetting the status quo too soon
could have a deleterious effect on business and compromise Alphonse’s ability to succeed. It is
possible that by 1849, with Alphonse of age and ready to assume the business in America,
Belmont had simply gained too much traction in American society to be easily replaced, regardless of his status as a mere agent.
By the end of the Civil War in the United States, the Atlantic financial world had changed
irrevocably, no longer governed by King Cotton. The merchants and bankers had moved on to
other, more profitable, as well as characteristically modern avenues of business. The Rothschilds,
like the Barings and Browns, had actually been moving out of cotton since the 1850s. All three
firms entered into the more lucrative exchange markets, selling specie, making arbitrage trades,
operating in gold and behaving much more like modern investment bankers. This shift in
activities was not a conscious choice. Nor was it immediately apparent. It was governed by the
availability of opportunity and can be seen in retrospect in changing patterns of investment and
greater interest in financial markets. At its root lay changes in the American economy and the

incorporation of the American West into larger American markets and institutions.
Kathryn Boodry is a doctoral student in the History
Department at Harvard University. She is presently
at work on her dissertation, a study of nineteenthcentury Atlantic financial networks and the
production and distribution of Southern cotton
entitled The Common Thread: Slavery, Cotton
and Atlantic Finance from the Louisiana
Purchase to Reconstruction. She was awarded
a Rothschild Archive Bursary in 2009.

bibliography
Bagehot, Walter. Lombard Street: A Description of the Money
Market. New York: Scribner Armstrong, 1877.
Black, David. The King of Fifth Avenue: The Fortunes of
August Belmont. New York: Dial Press, 1981.
Brown, John Crosby. A Hundred Years of Merchant
Banking: A History of Brown Brothers and Company,
Brown Shipley & Company and the Allied Firms,
Alexander Brown and Sons, Baltimore; William and James
Brown and Company, Liverpool; John A. Brown and
Company, Browns and Bowen, Brown Brothers and
Company, Philadelphia; Brown Brothers and Company,
Boston. New York: 1909.
Buxton, Thomas Fowell, and Charles Buxton.
Memoirs of Sir Thomas Fowell Buxton, Bart. 2nd ed.
London: 1849.
Draper, Nicholas. The Price of Emancipation: SlaveOwnership, Compensation and British Society at the End
of Slavery, Cambridge Studies in Economic History.
Cambridge, UK; New York: Cambridge University
Press, 2010.

Ferguson, Niall. The House of Rothschild. 1st American
ed. New York: Viking, 1998.
Katz, Irving. August Belmont; a Political Biography.
New York: Columbia University Press, 1968.

18

Killick, John. ‘Risk, Specialization and Profit in the
Mercantile Sector of the Nineteenth Century
Cotton Trade: Alexander Brown and Sons
1820‒1880’ Business History, 1974, Vol. 16, Issue 1,
pp.1‒39.
Killick, John R. ‘The Cotton Operations of Alexander
Brown and Sons in the Deep South, 1820‒1860’
The Journal of Southern History Vol. 43, No. 2
(May, 1977), pp.169‒194.
Penn, Elaine. Interfered with by the state of the times, the
American Civil War in the letters of August Belmont,
Rothschild Archive Review of the Year 2002‒2003,
The Rothschild Archive, 2003.
Perkins, Edwin J. Financing Anglo-American Trade:
The House of Brown, 1800‒1880, Harvard Studies in
Business History; 28. Cambridge: Harvard
University Press, 1975.
Temin, Peter. The Jacksonian Economy. The Norton
Essays in American History. New York: Norton,
1969.
Woodman, Harold D. King Cotton and His Retainers:
Financing and Marketing the Cotton Crop of the South,
1800‒1925. Columbia, S.C.: University of South

Carolina Press, 1990.

Bill drawn on de
Rothschild Frères, Paris
by August Belmont in
favour of Sylvain Bonné,
24 March 1852 for the sum
of ‘sixty one hundred and
eighty francs’.
ral 000/1490


notes
1 August Belmont to NMR, 17 July 1863.
ral xi/62/11.
2 Douglas Cecil North, The Economic Growth
of the United States, 1790‒1860 (New Jersey:
Prentice-Hall, 1965).
3 Quoted in John Crosby Brown, A Hundred
Years of Merchant Banking: A History of Brown
Brothers and Company, Brown Shipley &
Company and the Allied Firms, Alexander
Brown and Sons, Baltimore; William and James
Brown and Company, Liverpool; John A. Brown
and Company, Browns and Bowen, Brown
Brothers and Company, Philadelphia; Brown
Brothers and Company, Boston (New York:
1909 p.225).
4 David Black, The King of Fifth Avenue:
The Fortunes of August Belmont (New York:

Dial Press, 1981).
5 See Peter Temin, The Jacksonian Economy,
The Norton Essays in American History
(New York: Norton, 1969) and John R.
Killick, ‘The Cotton Operations of
Alexander Brown and Sons in the Deep
South, 1820‒1860’, The Journal of Southern
History, 4 (May, 1977), pp.169‒194.
6 American Letter books, ral ii/10/1, 29
April 1837.
7 James de Rothschild to his nephews in
London, 25 May 1837. ral xi/101/0/8/13.
8 Private papers re August Belmont & Co.,
New York, 1907‒1923. ral
xi/111/186‒187.
9 Black, The King of Fifth Avenue. See also
Irving Katz, August Belmont; a Political
Biography (New York: Columbia University
Press, 1968) pp.6‒7.
10 Black, The King of Fifth Avenue, pp.5, 22
and 39.
11 Letter from Belmont to NMR, 30
September 1839. ral xi/62/0 /2/48.
12 For further discussion of the various
financial transactions involved in
nineteenth-century cotton speculation,
particularly discount paper, see Edwin J.
Perkins, Financing Anglo-American Trade:
The House of Brown, 1800‒1880 (Cambridge:
Harvard University Press, 1975).For a more

general discussion of discounting within
the context of banking in the city of
London see Walter Bagehot, Lombard Street:
A Description of the Money Market (New
York: Scribner Armstrong, 1877).
13 John Killick, ‘The Cotton Operations of
Alexander Brown and Sons’, p.71.
14 Letter from Belmont to NMR, 12
September 1839. ral xi/62/0c/2/35.
15 James de Rothschild to his nephews in
London, 15 September 1839 ral
xi/101/2/4/63

16 Niall Ferguson, The House of Rothschild, 1st
American edn. (New York: Viking, 1998)
p.66. It is worth noting that the approach
described here, a cautious, risk-averse
policy that leads to steady profit in secure
markets, in contrast to overzealous
speculation, has a marked similarity to the
approach adopted by the bank in advance
of the most recent economic downturn.
17 For a discussion of the nineteenth-century
trade in discount paper and the practice of
discounting see Perkins, Financing AngloAmerican Trade. For more on the Browns’
management of risk see John Killick,
‘Risk, Specialization and Profit in the
Mercantile Sector of The Nineteenth
Century Cotton Trade: Alexander Brown
and Sons 1820‒1880’ Business History, 1974,

Vol. 16, Issue 1, pp.1‒34.
18 Thomas Fowell Buxton and Charles
Buxton, Memoirs of Sir Thomas Fowell Buxton,
Bart, 2nd edn. (London: 1849), p.293.
19 Belmont to NMR, 12 October 1852. ral
xi/62/5.
20 Betty de Rothschild to Alphonse de
Rothschild, 7 March 1849. ral 000/930
58/1/222.
21 See Harold D. Woodman, King Cotton and
His Retainers: Financing and Marketing the
Cotton Crop of the South, 1800‒1925 (Columbia,
S.C.: University of South Carolina Press,
1990), ch. 11, 131‒138. For a more critical
consideration of planter fantasies and the
relentless motivations to buy slaves with a
focus on the market itself, see Walter
Johnson, Soul by Soul: Life in The Antebellum
Slave Market, (Cambridge: Harvard
University Press, 2001).
22 Joseph Holt Ingraham, The Southwest By
A Yankee (New York: Harper, 1835), p.91.
23 Belmont’s letter to NMR, 6 May 1851 is
one example:
‘There has been some news in our cotton
market and prices have gone up about ⅜ ct
from the lowest point, in consequence of
advices from the south of a killing frost in
some parts of Alabama & Tennessee in
which I have not much belief….there has

been so much cotton planted that we have
every prospect for a large crop & this with
the now established fact that the present
crop cannot fall short of 2300m bales
must keep prices[?] down.’
24 For more on the collateralisation of debts
with slaves see Richard Kilbourne’s Debt,
Investment, Slaves: Credit Relations in East
Feliciana Parish, (Birmingham: University
of Alabama Press, 1996).
25 Killick, ‘The Cotton Operations of
Alexander Brown and Sons’, p.187.

26 Probably the initial advances were made
because of Forsyth’s prominence in
American politics, and it seems reasonably
clear that the mortgage was not secured
with either land or chattels. The initial
mortgage was issued from the Paris house.
The offer from John Forsyth Jr. to settle
includes 60,000 acres and fifty negroes.
See Belmont to NMR, 31 May 1842 ral
xi/62/2a/86. On the refusal of real
property for the settlement of the debt,
see Belmont to NMR, ral xi/62/2a/124.
The remaining $7,457.68 due was received by
August Belmont on 13 May 1850, Belmont
to NMR, 13 May 1850, ral xi/62/4b.
27 In the one case where this type of
association has been uncovered, Nathan

Mayer Rothschild and James de Rothschild
were counter-claimants as mortgagees on
compensation due under the slave
compensation process initiated after the
abolition act of 1833. They pursued the
compensation due for 88 slaves on an
estate in Antigua, for which Chas. Chatfield,
the trustee of Nathan’s executors was
awarded £1,570 18s after his death. The
two houses pursued this conveyance as
counter-claimants on a claim filed initially
by Robert Hyndman for 158 slaves on the
Matthews and Constitution Hills estates in
Antigua. To clarify, this was a counterclaim filed against a claim filed by a
defaulting debtor, Hyndman. As a means
of seeking compensation on a debt he
failed to pay, the two houses filed a
counter-claim against his claim for funds
on a debt he was owed. Thus the houses
were twice removed from owning or
securing debts with enslaved peoples.
To suggest from this information that the
Rothschilds were in fact slave owners is a
stretch. Likewise, to suggest that the
houses securitized mortgages with slaves
is inaccurate. For more on the filing and
compensation received under the
Abolition Act see the forthcoming work
on slave compensation by Nicholas
Draper, et. al. See also t71/1/877, The

National Archives, Kew and Nicholas
Draper, The Price of Emancipation: SlaveOwnership, Compensation and British Society at
the End of Slavery, Cambridge Studies in
Economic History (Cambridge, UK; New
York: Cambridge University Press, 2010).
28 Betty de Rothschild to Alphonse de
Rothschild, 16 May 1849.
ral 000/930 58/1/222.
29 Betty de Rothschild to Alphonse de
Rothschild, 7 March 1849.
ral 000/930 58/1/222.

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